RedHill Biopharma Ltd (RDHL)

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Simply Wall St too took the words right out of your mouth!

You took the words right out of my mouth! I've been holding Redhill since January, 2015...at $14.94 per share!

Shareholders in RedHill Biopharma (NASDAQ:RDHL) are in the red if they invested five years ago

https://finance.yahoo.com/news/shareholders-redhill-biopharma-nasdaq-rdhl-091051364.html

Simply Wall St
Thu, March 3, 2022, 11:10 AM

Long term investing works well, but it doesn't always work for each individual stock. We don't wish catastrophic capital loss on anyone. Imagine if you held RedHill Biopharma Ltd. (NASDAQ:RDHL) for half a decade as the share price tanked 80%. And we doubt long term believers are the only worried holders, since the stock price has declined 74% over the last twelve months. The falls have accelerated recently, with the share price down 27% in the last three months.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

Check out our latest analysis for RedHill Biopharma

Because RedHill Biopharma made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over five years, RedHill Biopharma grew its revenue at 77% per year. That's well above most other pre-profit companies. So it's not at all clear to us why the share price sunk 12% throughout that time. You'd have to assume the market is worried that profits won't come soon enough. While there might be an opportunity here, you'd want to take a close look at the balance sheet strength.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
earnings-and-revenue-growth
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective
RedHill Biopharma shareholders are down 74% for the year, but the market itself is up 6.6%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 12% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 2 warning signs we've spotted with RedHill Biopharma .